Vulnerable economy at risk from further damage

Scotland’s jobless total has risen for the third consecutive month, while the UK figure fell to a ten-year low. The Scottish unemployment rate is above the UK rate, and the Scottish employment rate is below the UK average.

It’s not a pretty picture for the Scottish Government, as the economy here continues to buck UK trends. The purpose of the re-establishment of a Scottish Parliament was to bring decision-making closer to home, and implement policies which would be tailored to assist the Scottish economy rather than follow a UK-wide policy which would not necessarily be effective in all parts of the country. The Scottish economy is underperforming, and while it is true that this may also have been the case under Westminster, it does justify the question of what good is being achieved under autonomy.

Of course, this is a simplistic analysis, and the Scottish Government can point to mitigating factors. The decline of North Sea oil and gas revenue continues to have a significant impact, and without that downturn, the figures would be healthier.

In addition, the youth unemployment rate was at its lowest level since records began, while female employment and inactivity rates continue to outperform the UK equivalent. And although the employment rate remains below the UK average, it has increased.

GDP was also up for the third quarter of last year, just ahead of the UK average.

These, however, are glimmers of hope rather than shoots of recovery. The overall picture is of poor performance. So, what can be done to drive the economy, that wasn’t already clear three months ago? There have already been calls for the Scottish Government to abandon any thoughts of a second independence referendum, on the basis that there is no economic case for such a scenario. But relating every event and circumstance to the constitutional question only distracts from the heart of the matter.

A call for the Scottish Government to make greater use of specific powers that have been devolved to Holyrood is closer to the mark.

Whether those powers would be effective or not is another matter, but there is one area where the Scottish Government can and should make a positive difference. There is justified concern over the impact of new business rates, with some firms facing increases of 200 per cent. If the economy is lagging behind the rest of the UK, this development has the potential to widen the gap, rather than close it. The businesses which can grow the economy need all the support they can get, and instead, a new problem has been presented.

Coupled with the ongoing effects of the oil and gas industry downturn, this has the potential to nullify any gains made elsewhere.

The underperforming economy requires special measures to get it back on track. Rolling out new business rates which industry believes will be enough to shut down some operations is a dangerous road to go down. The Scottish economy is too fragile to risk getting this one wrong.